Financial Market Update

Local and international financial market update.

GBP: BOE-MPC monetary policy decision came unchanged as expected, and the sterling was the beneficiary of a EUR led rally, primarily on the back of Draghi reiterating their readiness to purchase sovereign bonds of the periphery… Cable trades to a high of 1.6203 before meeting some good resistance… Overall picture looks bullish for the pair in the dailies…

JPY: USDJPY comes off its highs printed overnight as exporters take advantage of the uptick, especially in cross yen pairs… The pair has traded on a soft tone after Gotobirelated fixing demand earlier. The BOJ keeps monetary policy unchanged, and in spite of the decision being widely expected, this disappointed some bulls hoping for some change given the presence of the economic minister Maehara during the meeting. USDJPY trades back towards the lows in NY, albeit supported by gamma-related and importer bids, although I would expect offers now building higher (initially at 78.45/78.60, with more towards 78.80) given how fast money is long.

EUR: The euro gained after European Central Bank President Mario Draghi said the common currency is “irreversible.” The ECB is ready to start buying government bonds as soon as the necessary conditions are fulfilled, raghi said today at a press conference, after policy makers left the benchmark rate at a historic low of 0.75%. The euro increased as much as 0.9% to $1.3021, the highest level since Sept. 21.

Bonds - Weak demand persists across the curve irrespective of liquidity level in the cash market, it is also worthy to note that the expected increase in supply of JPM index bonds at the monthly auction for the last quarter contributes to the trend recorded in the last week.

Bills - NGN100 bio worth of OMO bills issued today as CBN continues on its liquidity mop-up. Demand exists but appears weak in the secondary market due to OMO issuance, yields are expected to average at current levels till liquidity levels drop.

Money Market - OBB and O/N rate closed at 10.25% and 10.50% respectively, NGN 266 bio was repaid to market today but NGN100 bio soaked up via OMO issuance.

Indicative Currency Exchange Rates
                                    Bid               Offer
EURUSD                  1.3000           1.3050
GBPUSD                   1.6190           1.6250
USDJPY                    78.00             78.50
USDCHF                  0.9310            0.9360
GBPEUR                   1.2400           1.2450
USDZAR                   8.3500           8.3550
USDNGN                  156.00            156.50
JPYNGN                   1.9700            2.0300
CHFNGN                  166.67            170.67
EURNGN                  202.06           207.56
GBPNGN                  250.98           258.48
ZARNGN                     17.41                19.41

Commodities
Brent went up more than $4.5/bbl yesterday – the move was unexpected and triggered many stops on the way up. Over in the US, current oil prices make it unlikely the Obama
administration will release crude from the Strategic Petroleum Reserve, said Daniel Yergin, chairman of IHS Cambridge Energy Research Associates. Republican presidential nominee Mitt Romney in a televised debate last night said pump prices doubled under
President Barack Obama. Republicans say that the U.S. should reduce dependence on imported oil by boosting domestic production.

Interest rates
NIBOR (%)                   LIBOR (%)
O/N             10.6667       USD 1 month        0.2185
7 Day           11.0000       USD 2 month        0.2875
30 Day        12.5417        USD 3 month        0.3525
60 Day        13.0417        USD 4 month       0.4426
90 Day        13.3333        USD 6 month       0.6224
USD 12 month      0.9590
Y/Y Consumer Inflation August 2012 :          11.7%
FX Reserves: 03 October 2012 (USD bn)      41.330
MPR                                                                      12.00%
Source: Reuters, Bloomberg, Central Bank of Nigeria, Financial Market Dealers Association Standard Chartered Bank Nigeria

Fx
                           Hi             Low           Close       Prev.Close
USD/NGN   157.15/25   156.15/25   156.40/50  157.15/25

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